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HOW DOES ONLINE SPENDING VARY BY GENERATION?

The Definitive Guide to Omnichannel Real Estate

Buying power and shopping habits can vary greatly by generation. Though online shopping is popular across all adult age groups in the U.S., differences in how age groups engage with digital channels are an important focus for omnichannel brands and their marketing and sales platforms. Below is a sampling of data on key spending and digital trends by generation.

Figure 1: U.S. Population by GenerationSource: U.S. Census Bureau, Pew Research Center, 2018.

Though definitions and age ranges can vary by source, Figure 1 shows a commonly accepted breakdown of the U.S. population by generational age groups. Though baby boomers are technically the largest cohort in absolute population (74 million), much attention is paid to millennials, who are forecast to outnumber baby boomers by 2019.

Spending power

Figure 2: Spending by Generation

Source: eMarketer, 2018

Just as important as the size of each generation is the spending associated with each. As seen in Figure 2, average household expenditure tends to peak between the ages of 35 and 55, which also tends to be the period of peak earnings for many adults. Overall spending, however, is highest for the baby boomer population, which spent more than $2.6 trillion in 2016. Though average household and total expenditures are highest for these two cohorts, millennials are set to show the most growth in spending. As older generations leave the workforce and millennials advance in their careers, spending power for the Gen Y cohort is expected to overtake both Gen X and baby boomers within the next five to 10 years.

Digital buyer penetration

E-commerce growth has transcended generations, with all age groups 14 and older showing rapid adoption of digital channels in their shopping behavior. In 2018, 18- to 34-year-olds had the highest percentage of digital buyers (internet users who made at least one purchase via digital channel during the calendar year), while the lowest penetration was seen among the youngest and oldest groups. And, interestingly, it is the oldest cohort of 65+ that has demonstrated the highest growth in digital buyer penetration, rising from only 22% in 2009 to 47% in 2018.

Different spending habits

In addition to differences in population size and spending power, different generations tend to display different lifestyle patterns and preferences that translate into distinct shopping behaviors. Below is a sampling of different facts and anecdotes on what defines each generation’s shopping preferences:

Gen Zers:

Account for an estimated $44 billion in buying power. 1

Short attention spans; the average online attention span of a Gen Zer is eight seconds. 2

78% of teenagers check their devices at least hourly. 3

52% feel they spend too much time on their mobile devices. 4

Millennials

Expected to account for 30% of total retail sales by 2020. 5

Believe that user-generated content is 50% more trustworthy than branded imagery. 6

62% are more likely to become a loyal customer when a brand engages them on social networks. 7

72% are more likely to purchase based on photos from others who have used a product. 8

Gen Xers

40% prefer viewing online content on laptops. 9

44% use in-store pickup or home delivery services when available. 10

Over 10% less likely to make impulse buys while using in-store pickup of goods than millennials or boomers. 11

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